The NSW government has pushed up the height limits in a new planning policy that allows multi-storey apartment buildings around 37 train stations, including nine in the Hunter.
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The government has finalised the planning policy and will publish maps this week showing the boundaries of the new higher-density zones.
It has increased proposed height limits under the scheme from 21 to 22 metres, or 24 metres in the case of apartment buildings with shop space on the ground floor.
The changes mean developers can apply to build eight-storey buildings, a move welcomed by industry lobby group Urban Taskforce.
"It was pleasing to see the government listened to Urban Taskforce concerns around building heights," the group's chief executive, Tom Forrest, said on Monday.
"These height-of-building changes enable the affordable housing 30 per cent bonus to be applied and deliver eight storeys in most situations."
The new policy allows for apartment buildings in residential and "local centre" zones and shop-top housing in commercial zones within 400 metres of the 37 train stations.
The policy includes the new height limits and more generous floor space ratios for apartments buildings.
Urban Taskforce argued unsuccessfully for the radius of the zones to be increased to 800 metres.
The Property Council of Australia criticised the height limits, saying they should have been doubled to make projects more commercially viable.
"It is disappointing to see that these calls have fallen on deaf ears and the NSW government will proceed with height controls that are effectively no different to what will be allowed under the mid-rise planning reform," Property Council NSW executive director Katie Stevenson said.
The new planning controls will apply immediately in 18 of the 37 train station precincts, including around Newcastle Interchange, Hamilton, Adamstown, Kotara, Cardiff, Teralba, Booragul and Morisset.
The new rules will apply to the Cockle Creek precinct from April 2025.
Developers can lodged applications for sites around the first 18 train stations from May 13.
The new planning policy requires developers to hand over at least 2 per cent of the apartments in a building to a community provider for affordable housing.
"This will create enormous complexity for smaller projects ... and could involve only one affordable housing apartment being delivered in any one development project," Mr Forrest said.
Planning Minister Paul Scully and Premier Chris Minns launched the "transport-oriented development" program in December to boost housing supply.
"Through this [policy] there is the capacity to deliver an estimated 170,000 more well located, well designed and well built homes throughout Sydney, the Illawarra, the Hunter and Central Coast," Mr Scully said on Monday.
The program overrides local government planning controls, but councils will continue to assess development applications and can reject proposals based on heritage considerations.
The proposed higher-density zone around Newcastle Interchange has now excluded the Wickham "village hub", a precinct designed to preserve part of the suburb's heritage scale and character.